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Archive for the ‘Coffee Can Investing’ Category

Horizon Therapeutics (HZNP) Has More Than Doubled in 2020

Monday, September 21st, 2020

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

HZNP has gained 120% YTD and several analysts expect it will continue to march higher. Check out the following two reports for several reasons why the company is likely to remain in demand – 5 Reasons to Invest in Horizon Therapeutics Amid Coronavirus and Hedge Funds Never Been This Bullish On Horizon Therapeutics (HZNP).

Technicals

When stocks are in a strong bullish trend, there are often periods of consolidation that are followed by a continuation higher. HZNP shows exactly this pattern as the stock consolidated in a sideways range for six weeks before finally breaking higher in the past week. The same $76 price point that previously acted as resistance has acted as support following the bullish range breakout which is also a positive sign. In the event the stock dips below $76, there is strong support from a rising trendline that has been in play for nearly six months.

HZNP Chart September 2020

HZNP Chart September 2020

If you agree there’s further upside ahead for HZNP, consider this trade which relies on the stock remaining above $80 through the expiration on October 16.

Buy To Open HZNP 16OCT20 75 Puts (HZNP201016P75)
Sell To Open HZNP 16OCT20 80 Puts (HZNP201016P80) for a credit of $2.13 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when HZNP was trading near $80.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will be only $1.30 per spread.  Each spread would then yield $211.70. This reduces your buying power by $500 and makes your investment $288.30 ($500 – $211.70).  If HZNP closes at any price above $80 on October 16, both options will expire worthless, and your return on the spread would be 73% ($211.70 / $288.30), or 1066% annualized.

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Dollar General (DG) Looks Set to Continue the Steady Rise

Monday, September 14th, 2020

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

Several Analysts have good things to say about DG, here are two of them – 2 Top Stocks to Buy in September and Hedge Funds Keep Buying Dollar General Corp.

Technicals

DG has been trading within a rising trend channel for just over four months. The 50-day moving average is currently near the lower boundary of the channel to offer a confluence of support. A test of this support zone in the past week resulted in a move higher which shows that buyers are willing to defend this area. In addition to the steady trend, DG has outperformed most of the stocks on the IBD Top 50 list over the past few weeks.

DG Chart September 2020 - Rising Trend

DG Chart September 2020

If you agree there’s further upside ahead for DG, consider this trade which relies on the stock remaining above $200 through the expiration on October 16.

Buy To Open DG 16OCT20 195 Puts (DG201016P195)
Sell To Open DG 16OCT20 200 Puts (DG201016P200) for a credit of $1.98 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when DG was trading near $200.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will be only $1.30 per spread.  Each spread would then yield $196.70. This reduces your buying power by $500 and makes your investment $303.30 ($500 – $196.70).  If DG closes at any price above $200 on October 16, both options will expire worthless, and your return on the spread would be 65% ($196.70 / $303.30), or 741% annualized.

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates September 12, 2020

IBD Underlying Updates September 12, 2020

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Microsoft (MSFT) – Recent Tech Sell-Off Offers a Buying Opportunity

Monday, September 7th, 2020

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

The following two articles offer compelling reasons why MSFT could move higher. The first is an analyst upgrade with a price target of $240 – Microsoft Stock (MSFT) Gets Price Target Increase To $240 From Mizuho. The second article outlines MSFT’s competitive advantages –  2 Tech Stocks That Are Thriving Despite the Coronavirus.

Technicals

We offered a trade idea in MSFT at the start of August and the option spread used in the idea expired for a 74% profit on Friday. Because of the decline over the past few days, the stock is once again testing the same trendline that made the trade attractive last time around. The 50-day moving average is also in play and this is an indicator the stock has not closed below in over four months. Friday’s candlestick formation signals buying activity and that the support confluence is being defended, at least so far.

MSFT Chart September 2020

MSFT Chart September 2020

If you agree there’s further upside ahead for MSFT, consider this trade which relies on the stock remaining above $212.50 through expiration on October 9.

Buy To Open MSFT 09OCT20 210 Puts (MSFT201009P210)
Sell To Open MSFT 09OCT20 212.5 Puts (MSFT201009P212.5) for a credit of $1.20 (selling a vertical)

This credit is $0.02 less than the mid-point of the option spread when MSFT was trading near $214.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will be only $1.30 per spread.  Each spread would then yield $118.70. This reduces your buying power by $250 and makes your investment $131.30 ($250 – $118.70).  If MSFT closes at any price above $212.50 on October 9, both options will expire worthless, and your return on the spread would be 90% ($118.70 / $131.30), or 1027% annualized.

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates September 5, 2020

IBD Underlying Updates September 5, 2020

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Should You Buy Amazon (AMZN) Following Its Earnings Report?

Monday, August 10th, 2020

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

Amazon had a strong quarter and the following two articles outline the earnings report and why the stock may head higher from here – Amazon (AMZN) Q2 Earnings and Revenues Top Estimates and Why Amazon Stock Climbed 14% Last Month.

Technicals

From a technical perspective, AMZN was held lower by a horizontal resistance level near $3250 on the rally that followed the recent earnings report. However, from a broader perspective, the stock has been firmly bid from a rising trendline that originates back to a low posted in March. Considering how long this trendline has been in place, and the long-term trend, the resistance at $3250 does not appear to be a big hurdle and it may only be a matter of time before this stock is trading at fresh all-time highs.

AMZN Chart August 2020 earnings announcment

AMZN Chart August 2020

If you agree there’s further upside ahead for AMZN, consider this trade which is a bet that the stock will continue to advance over the next five weeks, or at least not decline very much.

Buy To Open AMZN 11SEP20 3160 Puts (AMZN200811P3160)
Sell To Open AMZN 11SEP20 3165 Puts (AMZN200811P3165) for a credit of $2.40 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when AMZN was trading near $3165.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $238.70 and your broker would charge a $500 maintenance fee, making your investment $261.30 ($500 – $238.70).  If AMZN closes at any price above $3165 on September 11, both options would expire worthless, and your return on the spread would be 91% (1038% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates August 8, 2020

IBD Underlying Updates August 8, 2020

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Can Chegg (CHGG) Continue the Upward Rally?

Monday, July 27th, 2020

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

The following two articles outline several reasons why Chegg (CHGG) could see some more upside: Does Chegg (NYSE:CHGG) Have The Makings Of A Multi-Bagger? and Chegg (CHGG) Upgraded to Strong Buy: Here’s What You Should Know

Technicals

From a technical perspective, CHGG is seen dipping lower to test support from a rising trend channel that has encompassed price action since the middle of last month. Further support is seen just below the trend channel at the $70 price point. What’s most appealing is that the stock has been outperforming the broader markets in recent times and has held ground while other stocks have eased back. A minor hurdle is seen near $75. If the stock is able to clear it, the odds for a new record high appear favorable.

CHGG Chart July 2020

CHGG Chart July 2020

If you agree there’s further upside ahead for CHGG, consider this trade which is a bet that the stock will continue to advance over the next four weeks, or at least not decline very much.

Buy To Open CHGG 21AUG20 65 Puts (CHGG200821P65)
Sell To Open CHGG 21AUG20 70 Puts (CHGG200821P70) for a credit of $1.68 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when CHGG was trading near $73.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $166.70 and your broker would charge a $500 maintenance fee, making your investment $333.30 ($500 – $166.70).  If CHGG closes at any price above $70 on August 21, both options would expire worthless, and your return on the spread would be 50% (730% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates July 25, 2020

IBD Underlying Updates July 25, 2020

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Kroger (KR) Shows Renewed Upward Momentum Following an Earnings-Inspired Dip

Monday, July 6th, 2020

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

Several analysts have positive things to say about Kroger, here are two of them – Kroger: How The COVID-19 Crisis Could Provide Long-Term Tailwinds and Are Investors Undervaluing Kroger (KR) Right Now?

Technicals

Kroger corrected lower in June but the decline was shallow which signals underlying strength. Further, the dip that followed their recent earnings report was promptly bought up and the upward momentum has picked up notably since then. Strong support for the stock is seen at $32.70 as the 20 and 50-day moving averages have converged towards each other at that price point. Kroger has not traded below it’s 50-day moving average on a sustained basis for nearly a year as buyers continue to accumulate this stock near that particular indicator. To the upside, the $34.50 price point might be a near-term hurdle as it was in May, but a break above it would clear the path for a retest of the March high near $37.

KR Chart July 2020

KR Chart July 2020

If you agree there’s further upside ahead for KR, consider this trade which is a bet that the stock will continue to advance over the next five weeks, or at least not decline very much.

Buy To Open KR 7AUG20 30.5 Puts (KR20087P30.5)
Sell To Open KR 7AUG20 33.5 Puts (KR20087P33.5) for a credit of $0.87 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when KR was trading at$33.50.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $85.70 and your broker would charge a $300 maintenance fee, making your investment $214.30 ($300 – $85.70).  If KR closes at any price above $33.50 on August 7, both options would expire worthless, and your return on the spread would be 40% (456% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates July 4, 2020

IBD Underlying Updates July 4, 2020

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Netflix is Ready to Break to a Fresh Record High

Monday, June 22nd, 2020

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

Netflix closed the past week out strong and looks ready to continue the upward momentum. Take a look at what the following analysts had to say about the stock – Netflix ‘Impervious’ To Coronavirus, Recession: Imperial Capital and Netflix Stock: An Easy 2x

Technicals

NFLX falls in a group of stocks that were quick to recover from the sell-off earlier in the year.The stock has been consolidating within a range since mid-April but the upward momentum seen over the last week or so, combined with a strong weekly close, tilts the odds towards an upward break, in line with the broader trend. To the downside, $416 is considered to be a major support level and has held the stock higher on a weekly close basis. This same level previously served as resistance, holding NFLX lower in 2018. A break above $455 would signal a bullish continuation that stands to attract more buyers and a potential acceleration in momentum.

NFLX Chart June 2020

NFLX Chart June 2020

If you agree there’s further upside ahead for NFLX, consider this trade which is a bet that the stock will continue to advance over the next five weeks, or at least not decline very much.

Buy To Open NFLX 24JUL20 445 Puts (NFLX200724P445)
Sell To Open NFLX 24JUL20 450 Puts (NFLX200724P450) for a credit of $2.24 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when NFLX was trading near $453.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $222.70 and your broker would charge a $500 maintenance fee, making your investment $277.30 ($500 – $222.70).  If NFLX closes at any price above $450 on July 24, both options would expire worthless, and your return on the spread would be 80% (913% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates June 20, 2020

IBD Underlying Updates June 20, 2020

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Consider Kirkland Lake (KL) As Gold Prices Start to Regain Upward Momentum

Monday, June 15th, 2020

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

With the broader markets paring recent gains it appears to be a good time to be in precious metals and gold related stocks. Check out the following two articles which discuss the upside potential and a recent price upgrade – 3 Gold Stocks to Buy in June and Roth sees gold rallying to $2,200 by 2022, upgrades Kirkland Lake.

Technicals

From a technical perspective, KL has come into some notable support near $36 that buyers have defended thus far. There are a few more layers of support between $34.50 and $35 that originate from a weekly chart and technical traders may look to defend these levels in the event the stock dips a bit further. In addition to the strong downside support, a sharp rise in spot gold in the past week stands to keep related stocks well bid. Also, the popular gold miners ETF (GDX) made a notable bullish breakout last month and the technical outlook suggests this sector could be on the verge of a major bull run.

KL Chart June 2020 Gold stock options

KL Chart June 2020

If you agree there’s further upside ahead for KL, consider this trade which is a bet that the stock will continue to advance over the next five weeks, or at least not decline very much.

Buy To Open KL 17JUL20 30 Puts (KL200717P30)
Sell To Open KL 17JUL20 35 Puts (KL200717P35) for a credit of $1.33 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when KL was trading near $37.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $131.70 and your broker would charge a $500 maintenance fee, making your investment $368.30 ($500 – $131.70).  If KL closes at any price above $35 on July 17, both options would expire worthless, and your return on the spread would be 36% (411% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates June 13, 2020

IBD Underlying Updates June 13, 2020

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

Zoom Video Communications (ZM) Remains a Top Performer in Today’s Markets

Monday, June 1st, 2020

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

Zoom Video was criticized a few months back for security and other concerns, but nevertheless, the stock continued higher. It looks even more appealing now as the company continues to gain market share and the prior concerns are no longer weighing on the company’s stock price. Several analysts share the same bullish outlook, here are two of them – Here’s Why Zoom Stock Has Been Soaring — and What to Expect Going Forward and Hedge Funds Have Never Been This Bullish On Zoom Video Communications, Inc. (ZM).

Technicals

From a technical perspective, ZM has been held higher by a rising trendline for most of the year. The stock tested this trendline in the past week and in a matter of days it was on the verge of breaking to an all-time high. The stock has been well bought on dips in general and the momentum is firm to the upside. The $180 level could prove to be a short-term hurdle but there is little reason to believe this stock will not break to all-time highs.

ZM Chart June 2020 COVID stocks surge

ZM Chart June 2020

If you agree there’s further upside ahead for ZM, consider this trade which is a bet that the stock will continue to advance over the next five weeks, or at least not decline very much.

Buy To Open ZM 10JUL20 177.5 Puts (ZM200710P177.5)
Sell To Open ZM 10JUL20 180 Puts (ZM200710P180) for a credit of $1.33 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when ZM was trading near $180.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $131.70 and your broker would charge a $250 maintenance fee, making your investment $118.30 ($250 – $131.70).  If ZM closes at any price above $180 on July 10, both options would expire worthless, and your return on the spread would be 111% (1266% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates May 30, 2020

IBD Underlying Updates May 30, 2020

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

The Trade Desk (TTD) Has the Potential to Break to an All-Time High

Monday, May 25th, 2020

This week we are looking at another of the Investor’s Business Daily (IBD) Top 50 List companies.  We use this list in one of our options portfolios to spot outperforming stocks and place option spreads that take advantage of the momentum.

Several stocks have already broken to all-time highs and TTD looks poised to join this group. Check out the following two articles that both suggest that while TTD might be a bit expensive, it is a top pick among investors – The Trade Desk: Capturing A Revolutionary Trend and Investing in These 3 Top Stocks Could Double Your Money.

Technicals

TTD has shown strong upward momentum since the start of April. Dips have been shallow as buyers are quick to step in. Resistance near $324 has triggered a bit of pullback over the past few weeks which is to be expected considering it marks the previous all-time high. But the general lack of selling pressure from $324 is a sign of strength. Combined with the strong upward momentum as of late, a strong case can be made that the stock is headed to all-time highs. Technical support for the stock is seen at $280 which is considered significant as it acted as a major barrier over the summer last year.

TTD Chart May 2020 - Stock All Time High

TTD Chart May 2020

If you agree there’s further upside ahead for TTD, consider this trade which is a bet that the stock will continue to advance over the next five weeks, or at least not decline very much.

Buy To Open TTD 26JUN20 305 Puts (TTD200626P305)
Sell To Open TTD 26JUN20 307.5 Puts (TTD200626P307.5) for a credit of $1.18 (selling a vertical)

This price was $0.02 less than the mid-point of the option spread when TTD was trading near $308.  Unless the stock rallies quickly from here, you should be able to get close to this amount.

Your commission on this trade will only be $1.30 per spread.  Each contract would then yield $116.70 and your broker would charge a $250 maintenance fee, making your investment $133.30 ($250 – $116.70).  If TTD closes at any price above $307.5 on June 26, both options would expire worthless, and your return on the spread would be 88% (1004% annualized).

Changes to Investor’s Business Daily (IBD) Top 50 This Week:

IBD Underlying Updates May 23, 2020

IBD Underlying Updates May 23, 2020

We have found that the Investor’s Business Daily Top 50 List has been a reliable source of stocks that are likely to move higher in the short run.  Recent additions to the list might be particularly good choices for this strategy, and deletions might be good indicators for exiting a position that you might already have on that stock.

As with all investments, you should only make option trades with money that you can truly afford to lose.

Happy trading,

Terry

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Success Stories

I have been trading the equity markets with many different strategies for over 40 years. Terry Allen's strategies have been the most consistent money makers for me. I used them during the 2008 melt-down, to earn over 50% annualized return, while all my neighbors were crying about their losses.

~ John Collins